THE BEGINNING: LEARN TO WATCH AND LISTENING TO OTHERS

To start, I'd rather like to invent than innovate, this because Inventing has no limits to the imagination, risks are lower and there are many things under  the inventor's control. 

Making or designing new products-services is a big challenge, but the biggest challenge is the marketing of the new products. 

Understanding the marketing problem of new products is clear why many new technologies are sleeping in libraries, patent files, universities, family memories and a many innovating entrepreneurs are dealing with social discredit and debt. 

People who decide to innovate are almost always alone, one possible explanation for this is that innovation in practice involves taking many risks plus the high uncertainty environments where innovators are working.

Innovators are very special people , sometimes they come from a family of entrepreneurs, others because they had nothing to lose or they had no choice, there are others who simply do not want to deal with a boss. I must emphasize that not all people have the entrepreneurial/innovation spirit and it is a huge mistake try to find  innovators in every person. We need to understand that each person can define his productive life by his unique way.

In recent decades  innovation has been considered as a source of economic and social development of a country. Government and  private entities have structured many business plan competitions to stimulate innovation.

Today exist many educational programs in colleges and universities for innovation, suggesting that the profile of the innovator-entrepreneur will become more professional and structured. This new knowledge will certainly help to solve the great innovation challenges and reduce the risk. However the most critical issue remains the same: Without sales and the lack of the proper management of resources no viable project is possible.

From my point of view innovation is defined as follows: Develop a new product / service, which will be most often desired by most people who want to pay the maximum cash for the innovation for a very long time. This would be heaven. Unfortunately this is not possible. 

Let's start with the idea generation. The magical idea. This can come from anywhere, my experience says that a good model to find innovative and potentially suscessful ideas comes from the observation of the value exchange  present in a market. 

The vast majority of the value exchange process are opportunity areas that can be filled with new ideas. This method has been used for centuries by Syrian, Jews and Arabs salesmen among others for centuries.

An example: People from a country have a habit of eating certain foods, say corn tortillas. A tortillas lover would have to buy the corn, cook it and make them, which is a long, costly and time-consuming process and it is not related to the activities the person of our example do to earn money. (eg. works as a secretary). 

The exchange value is: if you want to eat tortillas you should pay money for each ingredient and have to invest time, resources and effort in processing. That is, to meet your need should give something back. In this example, money and labor. 

Some observers realize this need, and they make a plan to manufacture tortillas at the right price to sell to the secretary. At that point you have a potential business from an innovative idea. 

Some people can focus on making and selling tortillas, other people might think about increasing market coverage making the tortilla more accessible to the consumer  at home, others may sell at street carts stuffed meat, etc, etc, etc. And all are generating innovative ideas of potential viable businesses. 

This is a classic example of the identification of a need from an exchange of value with areas of opportunity. In other words: How do I identify a need? How do I cover it? How to make money by covering the need?. 

In short, we must learn to observe, listen and wear the shoes of others above all, it is a good way to have innovative ideas with market potential. 

At this point I must confess that I will have serious problems with those rooted in ideas, which means: There are often innovators with a leading role of the self. Instead of the "Other" .... The imperative of "I", is and will be the best person to begin to fail within the complexity of innovation.

SOME USEFUL CONCEPTS

All complex process, such as innovation, it requires some conceptualization work to reduce the difficulty and understand it´s causes and effects. 

I must say that most definitions of innovation are recent and still are subject to revision as there is greater scientific understanding of the related phenomena . 

Moreover, the conceptualization of the phenomena of innovation has evolved into an extremely abstract science, which, in many cases makes it very difficult to be understood by future innovators and entrepreneurs. 

I therefore, took  the liberty to use and adapt definitions according to my practical experience after testing and register innovation concepts during the last 15 years. 

In this blog I will start with simple definitions and after I will go deeper into them while progressing in each particular subject. 

Let's begin: 

Anchoring or Infatuation of Own Ideas: The belief, present in most beginners innovators/ entrepreneurs, consisting of  their ideas, besides being the best are the only, which causes major problems in finding the approach required to develop the new business. But if a beginner can survive to anchoring, he may take his project forward. 

Innovation: Creating or modifying a product or service and its introduction into the market. The most relevant characteristics of the innovation process are: 

a. Uncertainty: In the innovative processes nothing is certain no matter how much time and money are invested to planning, the  reality will be different. 

b.Ambiguity: Everything understood or any belief about an innovation process can be validated or not depending on their results in reality, in other words, you should have an open mind and willingness  to change if it is required by reality . 

c. Constant presence of error: Error will always be present in the innovation process, the problem is not to make mistakes, the problem is not to have methodologies to register their causes, to learn from them and solve them. 

d. Excessive optimism or pessimism: All innovators, from my point of view, are overly optimistic, and in very specific cases will be very pessimistic. The only way to control these extreme states is to think objectively about what is real and separate from what is not, and to be careful with  technological, marketing or business expectations. It sounds complex, but necessary. 

Invention: Creating a product or service that did not exist before. 

Radical Innovation (RI): Development of products/servieces that were not known before and market them. To market  RI the following is required: Technological development, market development and business development .All stages  require a large investment of time, money and other resources to covert an idea into a profitable business.

Radical innovations have been rare in the history of mankind, but once arrived generated hundreds of new business. I.e; Automotive and complementary business (fuel, tires, insurance, etc). 

Incremental innovation (ININ): is to make improvements or changes to an existing product. While it requires significant efforts to new design improvement , these are much smaller than radical innovations and in the same way are the marketing costs  and business development. These innovations are more common in many industries since the existing information from the original product on the market is used, which represents a lower technological, market and business risk. Ej. Changes in  packaging  made on a product in order to reach new market segments. 

Entrepreneurship: Is the action taken by people to develop a project. Usually it is accompanied by risk taking, hard work, perseverance, resilience to errors and failures, open mind, and ability to learn from good and overall callenging circumstances. Great ability to execute plans, to exercise foresight, to review results and make changes where needed. Resistance to social pressures, financial problems and market challenges, etc. 

Market: Environment, place or social organization in which business are made. 

Business: Exchange value between people occurs within the market. 

Value: Although this concept has many deep  definitions. The working definition in the topic of interest may be: The desire or need for a specific group of people, under certain circumstances and in a defined period for a specific product within a market. An example: The value of diamonds is high, since the product has some very unique features desired by certain groups of people; to get them is costly and the supply does not exceed demand so their price is also high. In the diamond business the most frequent value exchange is: diamonds for money. 

Price: Manifestation of the monetary value of a product. 

Business Plan: A document that seeks to show the technological, market and business potential  of a new project, usually done to get resources for business development. 

Patent of Invention: It is a right that a state gives it an inventor to use his own inventions for profit exclusively for a limited time. 

Product Patents: Protect developed products. 

Process Patents: Protect manufacturing  processes that enable a competitive advantage in an existing or new product.

Trade Secret: Any knowledge on industrial products and processes that keep in reserve allows the holder a competitive advantage. Trade secrets are another way to protect products and processes without resorting patents. 

Seed Capital: Funds required in the earliest stages of the development of an innovative project. Usually comes from friends, family and the entrepreneur himself. 

Venture Capital in Innovation: Monetary resources needed to develop a new project. In this case the novelty of the project is the main cause of the risk. In practice venture capital are all resources, primarily economic, the entrepreneur does not have and that he believes is necessary for the development of his new project. When funds belonging to individuals or organizations that specialize in managing money for others to generate the highest possible return in the shortest time possible, while minimizing the risk is known as risk capital. 

Angel capital: Resources that come from a very special investor, who decides to support new projects in exchange for an ownership equity, profit or personal satisfaction. They  can provide management advice, contacts, expertise to the new proyect. The literature defines them as affluent people who can provide resources for StarUps. 

Star Ups: These are new projects in its earliest stage. By definition such good ideas are those that arouse interest and enthusiasm, but are fraught with uncertainties.

Tactics: Short-term actions that should be part of the process to carry out a strategy. Are so easy to be confused with strategy. Business tactics without strategy only generate profits in the short term and are very effective to "putting out fires", the interesting thing is : many successful companies make their money just "puttin out fires" . The main confusion between tactics and strategies is present when managers ask vendors to define "sales strategies", freeing managers to structure "business strategies". 

Strategy: These are actions that seek long-term complex and deep goals. Confused with tactics very often. An example: When a football coach is leading a match, he is running high complexity tactics . But when the managers of a football team are planning a long-term goals and the resources to achieve them, that's strategy. If the comparison is allowed, most sellers are actually tactical implementers and managers, in some cases, are strategic planners. The great challenge of the strategy is to formulate the objective and keep it in time despite all the problems or correct if is required, in other words not to lose your way.

Why I make this?

When someone thinks about innovate, normally imagines a new product-service that is going to solve an existing problem, next to that a group of people is going to pay for the developed  solution and  innovator automatically will earn money for his initiative. However, almost always the implications and requirements for money earning are  unknown, and often  results are not as expected by the innovator-entrepreneur, his family, his friends, his business associates, creditors and society as a whole. It is common to see at the end a lot of frustrated, indebted and discredited people. I think this may change, so I encourage to make this blog based on my practical experience in innovation and entrepreneurship,  testing theoretical concepts the last 15 years, trying to synthesize, using an unpretentious language to explain the key elements that can help those who take the huge risk of innovation and entrepreneurship.


email: enriquetorres2011@gmail.com